Arch Chemicals Purchases Share in Swimming Pool and Potable Water Sanitizer Joint Venture in Brazil
Arch Chemicals, Inc. has purchased in Brazil the remaining 50% of Nordesclor S.A. from its joint venture partner, an affiliate of the Votorantim Group, a large Brazilian industrial conglomerate. The business produces calcium hypochlorite, a dry sanitizer, which it markets under the HTH brand for use in residential and commercial swimming pools. The sanitizer is also used to treat drinking water and to purify water under the HYPOCAL brand used in industrial applications such as the fish farming industry and in food disinfection applications.
The total cash purchase price is $16 million and is subject to a post-closing working capital adjustment and up to a $2 million contingent payment based upon future performance of the acquired business. The acquisition is expected to be cash and earnings accretive in 2006.
Located in Igarassu, Brazil, Nordesclor is the leading supplier to the sizeable Brazilian swimming pool market and the sole producer of calcium hypochlorite in Latin America. The entity reported 2004 sales of $24.6 million and net income of $4.6 million. Arch reported equity in earnings of $2.3 million in 2004 for its share in Nordesclor.
"The acquisition of Nordesclor is part of a multifaceted plan to significantly improve operating margins in our HTH Water Products business to 10% of sales by 2007. This transaction provides us with increased manufacturing flexibility to supply worldwide demand for our products. In addition, it allows us to expand our product offerings in the residential pool market and to capitalize on major commercial, industrial and municipal water-treatment growth opportunities in South America," said Arch Chemicals chairman, president and CEO Michael E. Campbell. "We particularly plan to significantly grow our business of providing sanitizers to address the need for potable water and wastewater treatment for which Nordesclor is uniquely positioned to capitalize, due to its strong local market presence."